U.S., China could reach an 'almost' agreement on trade, analysts say

Members of a U.S. trade delegation leave the Westin Hotel in Beijing, China, on Tuesday. File Photo by Wu Hong/EPA-EFE

NEW YORK, Jan. 10 (UPI) -- Economic uncertainty and underlying structural issues with the U.S. and Chinese economies could push negotiators to reach a "near-trade agreement" to end the months-long tariff dispute, a U.S. analyst said Thursday.

Catherine Mann, global chief economist at Citi, said at a panel hosted by the National Committee on U.S.-China Relations, an agreement to "calm the waters" may be imminent, as the Trump administration worries about volatility in the financial markets, and policymakers in China cope with a long-term economic slowdown.

But even a near-trade agreement will not resolve some of the most pressing issues that weigh on the world's largest economy, including the trade deficit, Mann said.

"Although U.S. growth looks very good right now, the trajectory is for substantial slowing," the analyst said. "We had volatility in the financial markets recently."

Speaking on the same panel, Lu Feng, the director of the China Macroeconomic Research Center at Peking University, said the latest data prove the trade war has not worked in the United States' favor or reduced the U.S. deficit.

"The bilateral surplus from China vis-à-vis the United States, has actually increased," Lu said. "The trade war tariff measures are not working. They are not addressing the imbalances between these two countries."

Lu said he remains "reasonably optimistic" that a deal will be reached because of domestic economic concerns in both countries.

The trade war has also opened up a Pandora's box of issues that have become more permanent that may not be settled through a signed agreement.

Zha Daojiong, a political scientist at Peking University's School of International Studies, said Thursday the dispute has invited dangerous ideas into public discourse, including the notion a new "Cold War" is brewing between Beijing and Washington.

"The most damaging part of the negotiations between the two countries at this point of time is this 'Cold War' idea -- the demand for third-party countries to choose between China and the United States," Zhao said. "It's going way beyond jobs, it's almost emotionally driven, it's almost hatred.

Daniel Rosen, founding economist at the Rhodium Group, told UPI the rising power of China creates unavoidable confrontation on the economic front.

"It's inevitable. It's what happens when power shifts in the world," Rosen said, adding "negative interpretations" of the bilateral relationship on the U.S. side makes matters complicated.

Stephen Orlins, president of the National Committee, told UPI the protectionist rhetoric that has frequently defined the Trump administration does not reflect public willingness to keep goods flowing into the country.

"There is a vocal minority that is anti-trade, but the majority of the American people are not anti-trade," Orlins said.

U.S. markets rallied this week as hopes built a breakthrough would be reached following the conclusion of U.S.-China trade talks in Beijing.